Unemployment falls to lowest rate since 2008

THE EMPLOYMENT rate in the UK economy has now returned to a record-equalling high during the three months to May, at 73.1 per cent, official figures confirmed yesterday.

The unemployment rate dropped again, falling to 6.5 per cent, the lowest since 2008, and economic inactivity – the number of 16- to 64-year-old people who are not employed but are also not seeking employment – de­clin­ed to 8.78m. The figure is the lowest recorded in more than 10 years.

There were 552,000 more employees during the quarter than at the same time last year. And the number of self-employed people increased by 404,000.

During the same period, the num­ber of unemployed people fell by 383,000 and the number of inactive people dropped by 117,000.

The rapid reduction in joblessness has so far surprised the Bank of England, and is likely to have an ­ on when policymakers feel comfortable raising interest rates.

“With the headline rate of unemployment now 1.3 percentage points lower than a year ago, even the most dovish members of the monetary policy committee accept that the spare capacity in the economy must be declining, and the case for a rate rise in 2014 is getting stronger,” said Stephanie Flanders, JP Morgan’s chief US and UK market strategist.

David Tinsley of BNP Paribas also identified other positive parts of the data.

He said: “The percentage of part-time workers who say they are in this position because they can not find a full-time job is falling relatively fast, down 0.8 percentage points over the quarter, though does remain rel­atively elevated.”

He continued: “Youth unemployment is also falling fast. The 18-24 unemployment rate is down to 15.8 per cent. This is the lowest rate since early 2009.”